July US corporate bankruptcy filings hit highest monthly total in 5 years

US corporate bankruptcies in July reached their highest monthly volume since 2020.

Large public and private company bankruptcy filings increased to 71 in July from a revised 66 in June and the highest single-month tally since July 2020, according to S&P Global Market Intelligence data. Year-to-date bankruptcy filings totaled 446 through the end of July, the most for this seven-month period since 2010. The data includes companies with public debt and assets or liabilities of at least $2 million or private companies with assets or liabilities of at least $10 million at the time of filing.

Companies are contending with elevated interest rates as uncertainty from US tariff policy pressures costs and supply chain resilience. The US Federal Reserve in July chose to hold its benchmark interest rate for the seventh-straight month at 4.25%–4.50%. Yet markets now project a nearly 90% probability that the central bank will issue a 25-basis-point rate cut in September, following downward revisions to job growth in an August labor report, according to CME FedWatch data Aug. 5. Companies could benefit from the rate cut if such a move impacts US Treasury yields or market sentiment.

"Yields at the front-end of the Treasury curve would almost certainly come down in any reasonable scenario where the Fed is cutting rates, but the very long end for the 10-year or 30-year is more in doubt," said Ryan Swift, US bond strategist at BCA Research. "If yields don't come down, then there is no economic benefit to borrowers from the rate cuts. But rate cuts could ignite animal spirits and send risk assets higher in the near term."

Treasury yields influence corporate debt interest rates more directly than the Fed rate. The yield for the five-year Treasury note, a benchmark reference for some corporate debt rates, was 3.96% at the end of July. This was down from 4.38% at the start of the year. Since mid-2022, the yield has remained above 3%, a point it rarely surpassed between 2015 and 2021.

Notable filings

Three companies entered the bankruptcy process in July with more than $1 billion in assets and liabilities at the time of their filings: LifeScan Global Corp., Genesis Healthcare Inc. and Del Monte Foods Inc. subsidiary Del Monte Foods Corp. II Inc.

Pennsylvania-based healthcare company LifeScan Global expects to reduce more than 75% of its debt through a restructuring support agreement with its lenders. The company develops the OneTouch brand of products for people managing diabetes.

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Genesis Healthcare, another Pennsylvania-based healthcare company, plans to address liabilities associated with previously divested operations while restructuring its finances during bankruptcy. The nursing home provider will continue to operate during the process.

Del Monte Foods Corp. II is pursuing a sale and balance-sheet restructuring through the bankruptcy reorganization process. In the interim, the company has entered into a restructuring support agreement with a group of its lenders.

Sector breakdown

Bankruptcies were concentrated in the industrial and consumer discretionary sectors through the first seven months of the year and in July.

There were at least 11 bankruptcies in July among large companies in the industrial sector, bringing the total for the year to 70. Bankruptcies among large consumer discretionary companies now total 61 this year after 10 filings in July.

Of the 446 companies that filed for bankruptcy for the year through July, 256 had a primary sector designated by Market Intelligence data. Just over half of these companies with designations were either industrials or consumer discretionary companies.

This Data Dispatch is updated regularly. The previous edition was published July 8.

Bankruptcy figures include public companies or private companies with public debt with a minimum of $2 million in assets or liabilities at the time of filing, in addition to private companies with at least $10 million in assets or liabilities. S&P Global Market Intelligence may remove companies from this list if it discovers that their total assets and liabilities do not meet the threshold requirement for inclusion.